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The Top 4 Threats to Asia-Pacific Growth Economies

18 April, 2019
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“Digital transformation offers APAC the ability to connect workforces to a global surge in technological advances, entrepreneurship and innovation.”

Asia-Pacific (APAC) economies experience fluctuations in the global economy in unique ways, because each is defined by particular geographic, societal and financial circumstances. However, the accelerated pace of digital transformation and tightening geopolitical tensions have connected the fates of all APAC growth economies to the ubiquitous effects of globalization.

Though APAC economies are projected to experience solid growth of 5.6 percent over the next two years, this optimistic forecast for the region remains prone to serious vulnerabilities.1 The areas of exposure can be organized into four categories: economic, geopolitical, technical and environmental. Let's take a look at each and how they may create challenges for nations poised for growth in the near future.

1. Economic: Debt & Housing

 

In 2016, APAC surpassed North America as the largest contributor to global debt. In fact, APAC accounted for 35 percent of the world's debt, marking a steady and significant rise since the financial crisis of 2008. This debt makes regional economies susceptible to increased interest rates and a potential default crisis.

Each economy has specific areas of exposure. In China, for example, nonfinancial corporations and household debt are rising, while in Japan, the primary concern is public debt that exposes its sovereign bond market to risks. India is also facing the impact of US$210 billion in spending on nonperforming assets in state banks.

Figure 1: Nonfinancial sector debt as a percentage of GDP across APAC.

Housing prices across APAC have been growing faster than income since 2010, especially in places like Hong Kong, Australia, New Zealand and India — where families in Mumbai find affordable housing nearly nonexistent. Though the costly housing situation has the region feeling anxious about a looming asset bubble on the verge of popping, each country has unique credit lending mechanisms and household debt numbers that determine their risk levels. These economies must heed lessons learned from the 2008 U.S. housing market crisis, where private households unable to pay their debts contributed to a global economic crisis that continues to haunt the international banking industry.

In fact, Australia currently has one of the world's highest levels of household debt. Considering that Australian bank portfolios are majority grown from mortgage lending — now at levels far surpassing the U.S. housing market just before the 2008 crash — many U.S. and global investors are more inclined to hedge the Australian market.

Figure 2: Compound annual growth rate for real residential property price and GDP per capita for selected countries across APAC, 2010–2017 Housing price data from Bank of International Settlement, GDP per capita data from Economist Intelligence Unit.

2. Geopolitical: Protectionism & Inequality

 

In an interconnected global economy, every region is affected by international trade dynamics and tariffs. The escalating trade war between China and the U.S. threatens supply chains across APAC, and a trend toward protectionism could infiltrate the area's closely intertwined network of economies as some countries struggle more than others.

Fast-paced geopolitical developments create uncertainty. That anxiety often compels businesses and policymakers to contract and insulate their economy's exposure to negative consequences. In fact, as China and the U.S. redefine their priorities, nations in APAC are forced to decide where and how they fit into this continuously evolving situation. From Australia to India, APAC economies must navigate the complexities of cooperating and competing with other nations without alienating business partners or sacrificing growth opportunities.

Figure 3: Wealth GINI coefficient in selected countries in APAC, 2012–2017 Data from the Global Wealth Data book (Credit Suisse).

While APAC seeks stability in chaotic geopolitics, many are experiencing seismic demographic shifts internally as a result of global trade and commerce. Access to trade-friendly seaports, modern technology hubs and high-skilled job opportunities has led to the rise of metropolises and megacities. The continued migration of younger generations to urban areas that offer innovative cultures, ideas and infrastructure is marginalizing peripheral and rural communities. This widening disparity between the haves and the have-nots could lead to income and wealth inequality, widespread resentment and civic unrest.

Policymakers are attempting to manage the prevailing attitudes and regulations that shape human capital management in APAC. Josephine Teo, Singapore's Minister of Manpower, recently addressed the need for Singaporeans to travel and work in surrounding countries — asking her fellow Singaporeans to keep an open mind about opportunities in other growth economies in APAC, particularly as Singapore strengthens business ties with China.2

3. Technological: Miracles & Menace

 

Technology will shape the future of the global economy. Emerging devices and technologies are developing faster than governments can regulate them, and this gap in oversight will create unprecedented opportunities for economic growth, innovation and crime. Technology has helped APAC increase workforce productivity, advance social reforms and champion environmental sustainability. The impact of digital transformation for ASEAN nations is tremendous, especially in e-commerce, where ASEAN nations accounted for 40 percent of global sales in Q1 2017; in Southeast Asia alone, the number of people with access to the internet and all of its possibilities is expected to triple from 200 million to 600 million by 2025.3

While new technologies will result in the loss of some jobs, these same technologies are set to create many new jobs. In fact, many companies building AI systems have found that human employees play an active role in designing and running AI.4 History reveals that innovation leads to job creation. Take the advent of the computer as an example. While the demand for typist-related roles may have decreased, the demand for computer-based work created new jobs related to developing, operating and programming. These gains, however, come with modern challenges, too.

Sophisticated cybercriminals from around the planet will continue to seek and exploit weaknesses in governments, institutions and enterprises of every size. As data and information become as valuable as natural resources, state-on-state cyber-attacks will increase in frequency and complexity. The confluence of alliances between governments and multinational corporations will have life-changing ramifications for populations and their rights to privacy. As different countries adopt different policies regarding human rights and access to personal information, a new generation of cyber-laws will emerge to set protective boundaries and mitigate human fallibility as people become more intertwined with their technologies.

Figure 4: Weighing the benefits of technology against its various risks.

4. Environmental: Natural Disasters & Man-made Solutions

 

Environmental factors will determine the future economic prospects and overall quality of life for APAC. Geographically, APAC is the most disaster-prone area in the world. Environmental events, such as floods and tropical cyclones, inflict tremendous damage on coastal areas — where most people, infrastructure and institutions are located. The unpredictability of natural disasters often results in the sudden — and sometimes massive — loss of human life, displacement of populations and widespread social and economic disruption.

In the aftermath of such trauma, individuals and communities must navigate their way through emotional grief and destabilized healthcare operations until governments and other agencies can provide relief. APAC must be proactive about implementing integrated policies and systems that can mitigate the devastation natural disasters pose to their people and economies. This is already happening: More mature markets, like Hong Kong, have exponentially increased the ability to align resources and swiftly respond to events, such as hurricanes. As technologies and business interests continue to connect APAC more closely, governments will have to decide what, exactly, their responsibilities are to other nations and the region.

Figure 5: Projected vulnerability changes for Asia and the Pacific.

Data from UNESCAP
 

On a global scale, APAC plays an integral role in curbing harmful emissions and pollutants. Antiquated infrastructure and lax regulations must be replaced with modern technologies and policies. Change, however, can be slow and expensive. Many APAC economies are still dependent on legacy energy resources, such as coal and other fossil fuels. Yet, strong progress has been made on regional and local levels.

China, for instance, has made remarkable progress in implementing green fuel technologies to replace coal and oil and reduce airborne pollutants.5 China's new initiatives to supplant fossil fuels with clean energy resources, such as wind and solar, has led to vastly improved air quality in cities, like Beijing — without negatively impacting the country's economy. In fact, China considers sustainable resources to be the future of energy and is aggressively investing in green businesses, such as high-tech solar panels (two-thirds of the world's solar panels are manufactured in China) and electric vehicles—surpassing even Tesla with a projected 7 million annual sales by 2025.6

APAC, as a region, has also agreed to frameworks and new technologies that promote renewable energy sources to combat air pollution and water scarcity issues that pose a direct and immediate threat. Balancing economic development with progress on climate and sustainability initiatives will be challenging but necessary.

Climate change, as with other challenges in the region, will require a new era of cooperation among APAC nations, governments and workforces. With the withdrawal of the U.S. from the Trans-Pacific Partnership (TPP) in January 2017, APAC was compelled to consider a more regional approach to solving global issues. APAC leaders, however, persevered and, in 2018, signed a revised version of the TPP with commitments from Australia, Brunei, Canada, Chile, Japan, New Zealand, Malaysia, Mexico, Peru, Singapore and Vietnam.

The new agreement, named the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), represents about 14 percent of the global GDP (down from the 40 percent the original TPP represented) and not only details new trade dynamics and oversight regulations among the participating nations but also compliance with mutually agreed-on environmental protection laws. Some of the clauses around intellectual property, arbitration and investment dispute resolution have been left out in the new treaty to allow for continuing reliance on ongoing multilateral collaboration on specific issues and local interventions by individual governments needed in public interest. The new treaty does not regulate movement of workers in the region, and member countries have ensured the interests of their agrarian and services economies are protected.

An increasingly internally focused U.S. may compel APAC to strengthen their ties to each other, opening up more avenues for business opportunities, talent exchange and shared participation in worldwide digital transformation. With most members set to ratify the new treaty, this represents a glowing bastion of free trade amid an increasing protectionist rhetoric elsewhere in the world.

There are many reasons to be optimistic about the future of APAC. Digital transformation offers the economies of APAC unprecedented growth opportunities and the ability to connect workforces to a global surge in technological advances, entrepreneurship and innovation. The pressing need to address environmental concerns and financial headwinds is creating a sense of urgency throughout APAC. The collaborative approach to solving problems bodes well for the future of APAC, as its committed leaders and locally based organisations coordinate their collective strengths to create prosperity throughout the region. As the global economy continues to evolve, APAC is poised to play an increasingly influential role.

Read Marsh & Mclennan's 14 Shades of Risk in Asia-Pacific report to learn more.

1Evolving Risk Concerns in Asia-Pacific:, http://bit.ly/2APQVlZ.
2
Lee, Pearl. "Ties with China Multifaceted and Strong: Josephine Teo." The Straits Times, 2 Mar. 2017, www.straitstimes.com/singapore/ties-with-china-multifaceted-and-strong-josephine-teo.
3
"Asean the 'next Frontier' for e-Commerce Boom." Bangkok Post. https://www.bangkokpost.com/business/news/1249798/asean-the-next-frontier-for-e-commerce-boom.
4
Mims, Christopher. "Without Humans, Artificial Intelligence Is Still Pretty Stupid." The Wall Street Journal,https://www.wsj.com/articles/without-humans-artificial-intelligence-is-still-pretty-stupid-1510488000?mod=article_inline.
5
Song, Sha. "Here's How China Is Going Green." World Economic Forum, www.weforum.org/agenda/2018/04/china-is-going-green-here-s-how/.
6
Jeff Kearns, Hannah Dormido and Alyssa McDonald. "China's War on Pollution Will Change the World." Bloomberg, www.bloomberg.com/graphics/2018-china-pollution/.

more in invest

Varun Khosla | 03 Oct 2019

For decades, any conversation involving startups and executive compensation conjured images of Silicon Valley and shiny office buildings full of technology virtuosos working for innovative companies striving to be the next billion-dollar unicorn. Now, a new era of global startups is taking root in previously unexpected regions around the world. In fact, recent research reveals that $893 million was invested in 366 startups throughout the Middle East and North Africa. That number represents a $214 million increase from 2017, which saw $679 million in startup investments.1 Similarly, startups are increasing in Southeast Asia, largely driven by "SEA turtles" — locally born residents who studied and worked overseas (mostly in the West, in places like Silicon Valley) and are returning home to launch their own startup companies. The region has experienced a major inflection point, with VC investors in Southeast Asia investing over $7.8 billion across 327 deals.2 There's one key component all these startups need, however: leadership. But attracting and retaining executive-level talent and management teams can be a major challenge for these burgeoning startup hotbeds, especially when it comes to compensation. Corporate Investors Are Changing Executive Compensation   Many of the world's most recognizable startups were launched by charismatic, individual founding partners, such as Jeff Bezos, Jack Ma and Mark Zuckerberg. However, the rise of these luminaries and their compelling stories do not mirror the new era of startups blossoming around the world. In the Middle East and North Africa (MENA), for example, investment companies are providing the initial financial backing needed to launch startups. These investment companies are there from day one to ensure the startups have the capital needed to secure subsequent rounds of funding. Additionally, the executives of these startups are not the original founders and, therefore, desire different compensation models to secure their continued loyalty, creativity and commitment. Acquiring top C-level talent for startups can be a daunting task, as the risk level is high for businesses that do not have a proven track record — or any record at all. Traditionally, western-based startups have fashioned executive compensation packages around medium- to long-term benchmarks predicated on the company's expected growth, but triangulating growth models, investment strategies and executive payment packages can be a complicated and tenuous proposition. Since most global startups today are built around investment companies instead of inspirational individual founders, these companies must be diligent when determining how or how much to pay the executives — who can ultimately mean the difference between success and failure. How Much Should Executive Compensation Be?   Investment companies naturally want to maximize their profits, which means they want to retain as much equity in the startup and as many shares of the startup as possible. Every dollar, share of stock or option paid to startup executives is money the investment companies surrender to operational costs. However, low-balling startup executives or opting to hire those who aren't as skilled or experienced also comes with the risk of undermining the startup's ability to compete, grow and drive revenue. Financial arrangements that provide management with a potential share of equity (or shadow equity) require careful thought and consideration. 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Or should executive compensation be based on employees performing their jobs to the best of their abilities, regardless of the outcomes — which are often determined by external economic forces beyond their control. Many startups now implement the former strategy, believing that benchmarks for returns on investments motivate executives and provide them with the extra incentive to do everything possible to create shareholder value. In fact, in a majority of cases, long-term incentive plans only pay out when investors receive a return. Alternately, some startups choose to compensate executives and management based on specific, mutually agreed upon corporate goals and objectives. Compensation can then be provided as cash or shares, though there may be restrictions on when those shares can be sold or vested or whether they come in the form of options or full-value shares. Startups are popping up all over the world, ushering in a new frontier of ideas and innovation, as well as investors and executives who will create the next generation of future unicorns. As new trends continue to emerge for how executives in these startups are compensated, global startups will need to review their options with scrutiny to attract the best executive talent while maximizing returns for investors. Sources: 1. "2018 MENA Venture Investment Summary." MAGNiTT, January 2019,https://magnitt.com/research/2018-mena-venture-investment-summary. 2. Maulia, Erwida. "Southeast Asian 'turtles' return home to hatch tech startups." Nikkei Asian Review, 22 May 2019,https://asia.nikkei.com/Spotlight/Cover-Story/Southeast-Asian-turtles-return-home-to-hatch-tech-startups.

Fiona Dunsire | 05 Sep 2019

The markets across Latin America, the Middle East, Africa and Asia are some of the most exciting in the world, amid a backdrop of economic growth and changes in demographics, investment markets and regulations. Mercer's Growth Markets Asset Allocation Trends: Evolving Landscape report examined retirement plans in 14 of these markets, with a look at current investment positions and changes over the past five years. The study included retirement fund assets of almost $5 trillion across markets in the Southern and Eastern hemispheres. These areas offer exciting potential for asset owners, managers and investors, as almost 70% of global growth now comes from these economies, according to the World Bank. We are also seeing a rapid expansion of the middle class, creating different patterns of consumption and savings. In addition, half of the top 50 global institutional investors are located in these markets.1 The Global Investment Landscape Is Becoming More Robust   Because the economies of Latin America, the Middle East, Africa and Asia are large and growing, with a rising share of wealth being held by individuals, they are of particular interest to investors around the world. These markets are also becoming increasingly open to foreign investors. At the same time, regulatory changes within these regions are allowing domestic investors to invest more broadly and outside their home markets. All these developments translate into a more open and robust investment landscape, with increasing opportunities for investors across the globe. The pension and savings systems in these regions are also undergoing reform, with the same trend toward increasing individual responsibility for retirement savings as seen in Western countries. Overall, we are seeing a shift to defined contribution (DC) plans at the expense of defined benefit (DB) plans across both corporate and government-sponsored schemes. These changes further emphasize the need to deliver effective investment solutions to meet future savings needs and ensure trust in the systems. 3 Ways Investors Are Responding   Investors and plan managers are responding to the changing environment in three key ways: 1.  More investors are putting money in equities. In the past five years, equity allocations rose approximately 8%, from 32% to 40%. For investors in many jurisdictions, the shift was intended to increase expected returns on the portfolio. Investors across the world face challenges amid an increasingly competitive investment landscape and a low return environment. Adding equities to the portfolio mix should offer greater return expectations over time. 2.  Market liberalization is enabling more diversified portfolios, through increased exposure to foreign assets at the expense of domestic assets. On average, foreign exposure in retirement plans increased from 45% of the overall equity portfolio to 49% in the past five years. Investors sought greater geographic diversification, especially in Colombia, Japan, South Korea, Malaysia and Taiwan. In some countries, such as Brazil, Colombia, Peru and South Africa, recent changes in legislation now allow increased foreign asset exposure. In Japan, the Government Pension Investment Fund has seen a move to more foreign equities at the expense of domestic equities in recent years. The shift to foreign assets was also present in fixed income, with the proportion of foreign allocations rising from 16% to 23%, in part due to less attractive local interest rates, as well as a search for increased diversification. Significant home biases remain; however, we expect this trend to continue as regulatory changes support broader global investment. 3.  Investors are showing slightly more interest in alternative investments. More investors are including alternatives in their portfolios, and Mercer expects that trend to continue on an upward trajectory. Among those investors who provided details on their alternatives asset allocations, more than 70% of the average allocations went to property and infrastructure, and approximately 20% went to private equity. Changing regulations have made alternatives more attractive for investors in some areas. For instance, in Chile, a 2017 reform to the investment regime passed, allowing pension managers to invest in alternatives up to 10%, though specific limits vary by portfolio. The main objective of this enhancement is to boost returns and ultimately retirement incomes. As investors seek to diversify their portfolios and seek return enhancement, we expect alternatives exposure to continue to grow over time. We hope investors use our report's findings as an opportunity to review their own portfolio and determine where they can improve their asset allocation to achieve even better investment outcomes. To learn more, download the full report here. Sources: Top 1,000 Global Institutional Investors." Investment & Pensions Europe, 2016. https://www.ipe.com/Uploads/y/d/w/TOP-1000-Global.pdf

Katie Kuehner-Hebert | 22 Aug 2019

As companies continue to migrate to all things digital, this wave of transformation will inevitably wash over every area of work, digitizing everything from finance functions and tax compliance to data analytics and beyond. Approximately 73% of executives predict significant disruption within their industries in the next three years, according to Mercer's Global Talent Trends 2019 report. This number, up from 26% in 2018, is greatly due to digital transformation. More than half of executives also expect AI and automation to replace one in five of their organization's current jobs. While this might worry some organizations, these two earthquake changes stand to create 58 million net-new jobs by 2022. Business leaders responding to Mercer's annual survey have mixed opinions on the economic growth these technological advances will have across the globe. 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Mercer's Themes and Opportunities 2019 research report notes "mounting evidence of over extension of credit" is creating further white-water turbulence, with the uncertainty over how the central banks' retreat from market involvement after massive liquidity infusions will impact economies. The report also notes that there is a distinct possibility "the pace of globalization could slow, pause or even go into reverse" due to political influence, particularly on trade. In addition, there are increasing expectations from governments, regulators and beneficiaries to have asset owners and investment managers incorporate sustainability as a standard action. Digitally Transforming Tax Compliance   Companies navigating all these shifting sands will increasingly look to digitization to help manage and respond to both opportunities and obligations — including tax compliance across geographies. This is also a moving target, particularly in Asia, as some countries are now implementing digital technologies to improve their tax collection efforts. In 2015, the average tax-to-GDP ratio for 28 economies in the region was only 17.5%, which is just over half the average tax ratio of 34% among OECD economies. There has been a great deal of progress with the use of electronic filing of tax returns for major taxes in India, Kazakhstan, Malaysia, Mongolia, Nepal, Singapore and China. Moreover, mandatory electronic payments are now required by revenue bodies in the People's Republic of China, Indonesia, Mongolia and Vietnam.1 Digitization and increased tax regulation are also intended to vastly improve collection efforts, though much more push is needed. Governments are making great strides within their tax administration efforts with the aid of digitization — including sending eAssessments to businesses for taxes owed, based on electronic auditing systems.2 If the systems find discrepancies within sellers' monthly tax reports, it automatically issues an eAssessment that includes interest and penalties. Andy Hovancik, President and CEO at Sovos, puts it plainly: "Bottom line — tax enforcement is now embedded in the most important business processes, changing the world of tax and disrupting decades old business processes. As a result, tax is driving digital transformation in finance and accounting departments. Now more than ever, businesses need a new approach to tax automation to ensure compliance."2 Finance executives agree, including Michael Bernard, chief tax officer for transaction tax at Vertex Inc. He states, "Governments worldwide are turning to new forms of compliance, like e-invoicing regulations, which require IT departments to embed workflows in core processes, and real-time VAT compliance checks. In 2019, finance organizations will begin to factor tax considerations into their digital transformation strategies. An effective road map will include actions for using data to link business processes and tax compliance obligations."3 Guiding Business Strategy With Compliance   Digitization alone won't enable companies to better comply with new tax regulations — making compliance a central business strategy will. This includes implementing training sessions across the enterprise to help employees develop a state of mindfulness when it comes to compliance. But in this era of increased accountability, Leila Szwarc, global head of compliance and strategic regulatory services at TMFGroup, states that companies should re-imagine the notion of compliance as a "business enabler" that can distinguish it from competitors.4 According to Szwarc, "Compliance should be seen as a business enabler rather than as a drain on development, but this can only happen if businesses work in an integrated way to bring creative solutions to the related organizational challenges." She continues, "As APAC firms face up to a new regulatory era, compliance teams have a key role to play in both protecting their firms' interests and helping to drive long-term competitive advantage." With an uncertain market ahead and vast changes on the horizon, it's more important than ever to get ahead of the curve and think about how your business can not only survive the wave of digital transformation coming but also thrive with it. Start planning your business strategy, placing compliance and digitization at the heart, with these considerations in mind today, and you'll be better off tomorrow. Sources: 1.Suzuki, Yasushi; Highfield, Richard. "How digital technology can raise tax revenue in Asia-Pacific." Asian Development Blog, 13 Sept. 2018, https://blogs.adb.org/blog/how-digital-technology-can-raise-tax-revenue-asia-pacific./ 2.Hovancik, Andy. "How Modern Taxation is Driving Digital Transformation in Finance." Payments Journal, 16, Jul. 2018, https://www.paymentsjournal.com/how-modern-taxation-is-driving-digital-transformation-in-finance/. 3. Schliebs, Henner. "2019 CFO Priorities: Experts Predict Top Trends." Digitalist Magazine, 18 Dec. 2018, https://www.digitalistmag.com/finance/2018/12/18/2019-cfo-priorities-experts-predict-top-trends-06195293. 4.Szwarc, Leila. "Regulatory compliance – The new business enabler." Risk.net, 18 Mar. 2019, https://www.risk.net/regulation/6485861/regulatory-compliance-the-new-business-enabler.

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Amy Scissons | 28 Nov 2019

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This takes time and awareness as each person behaves according to varying types of motivations, instructions and sensibilities. As a company, we have to be demanding, because we have aggressive goals. However, the most effective and rewarding route to achieving those goals is by making the conscious decision to encourage employees as they execute their responsibilities — especially during challenging times. Regardless of gender, race or nationality, I think that one overriding universal truth is that people respond more graciously, productively and passionately to authentic positive feedback and encouragement. I know this personally, because I have benefited from positive reinforcement many times in my career — often when I needed it the most — from my peers, colleagues and fellow team members. It really helps. In fact, the most successful leaders I know and have worked with are extremely positive people. Teams and individuals need to be reminded, particularly during tough times, that they are doing excellent work and they are moving in the right direction. Never underestimate how much a genuine comment, like "You're doing a great job" and "Keep going" can do for someone who feels overwhelmed, underappreciated or unmotivated at a particular moment in their career. Positivity is all about appreciating the time and work employees invest into success and giving them credit for their efforts and accomplishments. Originally published in Thrive Global.

Digital transformation and the Fourth Industrial Revolution are rapidly changing how workers perceive their professional futures and career experiences. Artificial intelligence (AI), machine learning and automation are replacing once reliable careers and industries with worried workforces, putting the global economy in a constant state of flux. These technological advancements, however, are revolutionizing how employees perceive and manage their own careers. Mercer's Global Talent Trends 2019 study reveals that both individual employees and employers must collaborate to address the disruptive impact of advanced technologies. Fortunately, in Latin America, Kimberly-Clark recognized this fact and partnered with Mercer to develop a game-changing approach to professional development in an economy defined by constant digital change. The solution combines the value of seasoned mentors within the workforce and a digital platform that empowers employees to create their own paths toward professional development. The Career Experiences Platform   Kimberly-Clark challenged us with the task of deriving positive outcomes from the costly disruptions that will impact the company's employees and business operations, so we went straight to the source. We surveyed 150 workers and discovered a startling outcome: 4 out of 5 employees reported having a lack of clarity regarding their careers and desired more support in finding that clarity. In light of these responses, we created a digital mechanism that enhanced job satisfaction and career stability for employees in an era haunted by the specter of the unknown. The result was the Career Experience Platform. Kimberly-Clark wanted to provide its employees with ways to advance their careers at a time when the business landscape was being restructured and impacted by forces that people felt were far beyond their control. Knowing this, we dove deeper to gather all the information we could to truly understand what employees were feeling — and why. From our findings, we devised a program based on four key sprints: 1.     Information gathering 2.     Content enhancements 3.     Streamline applicability 4.     Validate everything The results were surprising and incredibly valuable to employees and the company in realizing the importance of unique career-driven experiences. By implementing an agile methodology based on sprints, Mercer was able to seamlessly build and iterate the development of the platform and process within Kimberly-Clark's existing organizational structure. Kimberly-Clark considered Mercer's creative approach to being a flexible and adaptable partner as a key differentiator. Each agile sprint featured a clear objective, from brainstorming and interviewing employees and stakeholders to building detailed experience maps and designing an intuitive interface that employees found engaging. Mercer worked closely with every level of Kimberly-Clark's employee structure in manageable sprints and timelines to ultimately deliver an inspiring digital career playbook and suite of professional development tools and assets, so employees could create their own career path strategies. The Career Experiences platform features a customized host of tools and functionalities that combine the value of human wisdom with digital management insights and capabilities. By providing each employee with recommendations from seasoned mentors within Kimberly-Clark, employees can make informed decisions and professional development choices based on their personal aspirations. This allows employees to take a proactive approach to their own career enhancement through continuing education and select career paths and work experiences. These recommendations, when combined with individual use of the platform to make decisions based on evolving interests, talents and skills, will prove critical in confidently navigating a work environment that is constantly evolving due to the rapid advancement of technological innovation. Self-Determination Through Transparency   Transparency is critical to C-suite leaders and managers who are responsible for the well-being and productivity of their employees. Oftentimes, the higher-ups in large businesses feel disconnected from the realities of their employees and seek ways to genuinely connect with them to understand their challenges, ambitions and professional goals. Our platform democratizes communications between employees and leaders, which increases mutual understanding, while reducing bureaucracy and empowering employees to take control of their own careers. The Career Management Platform offers employees at Kimberly-Clark an invaluable advantage as they consider the future: career management clarity. Designing and fulfilling a career plan is a complex process that involves navigating often nebulous and confusing opportunities and challenges. Mercer developed the platform so employees could leverage a self-administrated tool that grants them access to career experiences and recommendations from senior mentors. This collaborative dynamic provides employees with the ability to easily see they have both a future at Kimberly-Clark and access to top-notch career advice about how to achieve their professional ambitions. The platform compels employees to grow and dream at their own pace while constantly inspiring them to expand their skills, talents and knowledge base — as well as their job security and career paths within the company. Self-administration also allows employees to take control of their own careers and professional development. Everyone knows a friend or family member who had their careers hindered by an unhelpful boss or manager. This platform allows each employee to showcase their goals and accomplishments outside of the bias of any individuals who have disproportionate amounts of control over their future. For executives, this new level of access to the employees and human capital in their businesses is game changing. It's also worth noting that when a productive employee leaves because they feel overlooked, underappreciated or ignored, the multifaceted cost of replacing that employee can be quite burdensome to an organization. In Latin America, only 50% of employees in our engagement survey reported being satisfied with their career development opportunities — meaning there's a chance the other 50% have contemplated looking for a more satisfying job elsewhere. This can be devastating to companies that not only lose valuable people but also must spend significant time, money and resources to replace them. The New Horizontal Upward Mobility   Traditionally, career advancement was defined by moving upward — increasing your salary, position and power by making vertical moves up the corporate ladder. However, today, employees should consider horizontal moves as an effective, long-term career strategy. Our platform can connect employees to unprecedented opportunities for professional development. Though restructuring can mean the elimination of conventional jobs, our new world is increasingly connected by powerful technologies that provide employees the chance to move horizontally to previously overlooked but incredibly rewarding opportunities. For example, an employee could become a first assignment country manager in places such as Bolivia, Nicaragua or Uruguay. Change is underway, and the jobs of tomorrow will not simply require years of toiling behind the same desk or workstation using the same conventional skill sets. Beyond even horizontal shifts, career advancement in the future will require critical thinking abilities forged by challenging job experiences and unique professional histories. It's time to place new value on experiences that can result in more dynamic, well-rounded and informed employees. The Future of Work From Day One   Our research has found that the top three concerns for employees are job stability, salary and future career opportunities. We've developed the user-friendly Career Experiences Platform to reconcile these concerns. Kimberly-Clark trusted us to fulfill their mandate of creating new, unprecedented opportunities for their employees in an economic landscape where nothing is certain. The final result garnered an incredibly enthusiastic response from not only the employees but from their managers and leaders, too, who felt an obligation to provide their employees with a stable and rewarding career experience. The collective response of appreciation was moving for everyone involved. In addition, the platform poses exceptional value to workers and employers, because it can be implemented from day one of an employee's career. It serves as a source of truth throughout their journey within the organization. As the global economy adapts to digital transformation, Latin America and the rest of the world must find ways to empower employees and companies so that human beings and technology continue to invent new ways to find job satisfaction and quality of life. The Career Experiences Platform is an excellent start. The best lesson we learned from this experience is that employees and employers want what is best for each other — and we're glad we can facilitate that connection.  

Didintle Kwape | 14 Nov 2019

Africa's youth employees are a valuable, ample talent source that multinational companies can tap as they expand their operations throughout the continent. Record numbers of teenagers and young adults in Africa are either unemployed or underemployed but are willing to work if given the chance. In South Africa alone, where the unemployment rate is expected to grow beyond 30% this year, two-thirds of the jobless are between 15 and 24 years of age.1 Realizing the Untapped Talent Pool   "We are very much alive to the fact that youth unemployment is indeed a national crisis," stated South African President Cyril Ramaphosa in June 2019.2 Governments across the continent are now rewriting labor laws and breaking down bureaucratic hurdles to make hiring youth less cumbersome for both multinational corporations and local small businesses. They are also teaming up with nonprofit organizations to nurture young talent and teach necessary workforce skills. Alliances are being forged to aid these efforts, such as the International Labour Organization's (ILO) partnership with the African Development Bank, the African Union Commission and the United Nations Economic Commission for Africa (UNECA). Together, they hope to address youth employment at regional and national levels. To better prepare youth for work, the ILO provides employment services, skills development and labor market training — with a focus on technical and vocational education, apprenticeship and job placement services for disadvantaged youth.3 In June, Kenyan President Uhuru Kenyatta launched the Young Africa Works program, a public-private partnership for youth employees between the Mastercard Foundation, the Kenyan government and the private sector. Within the next five years, the program aims to groom and place five million young Kenyans in "dignified and fulfilling work." 4 The MasterCard Foundation, along with two Kenyan banks — Equity Bank and Kenya Commercial Bank, as well as their respective foundations — will provide about $1 billion in capital, business development services and market linkages for the program. The aim is to create these jobs for youth employees, which will also help over 200,000 micro-, small- and medium-scale enterprises strengthen their productivity, sustainability and creation growth.4 The international hotel industry is one sector that's nurturing the development of the continent's youth, as hoteliers expand into Africa's emerging markets, according to Jan Van Der Putten, Hilton's VP of Operations for Africa and Indian Ocean.5 Hilton now has 46 hotels open across Africa, including sites in Morocco, Kenya, Zambia and Botswana, with plans to more than double that amount in the next five years. Expansions in tourism and hospitality will not only boost socioeconomic growth, but it will also provide meaningful employment opportunities. As such, it's paramount to foster an environment to help African youth workers succeed. Training the Youth of Today   In addition to basic workforce skills, the emerging digital economy also requires youth employees to learn the skills of digital fluency, creative thinking, problem-solving, collaboration, empathy and adaptability.6 Simbarashe Moyo, a Mandela Rhodes Scholar at the University of the Witwatersrand, notes, "Although countries like Rwanda and Kenya are already making considerable progress in preparing their youth for the digital economy and the future of work, more African countries are yet to take meaningful action to address the yawning skills-gap and digital infrastructure inadequacies bedeviling the continent."7 Moyo advises that African nations need to equip youth for the future of work. First, they must create responsive education systems that will equip the youth with the proper skills and a sense of responsibility. They also need to develop a nationwide digital infrastructure to improve interconnectivity between nations. In addition, to keep stakeholders in check within the expanding digital economy, they need to formulate proper regulatory policies. Lastly, they need to optimize public-private cooperation to support digital training initiatives on a larger scale. "Collaboration between governments, multinational development banks and the private sector will create room for innovative financial models which promote upskilling among Africa's youth," Moyo writes. "This will also reduce inequalities caused by duplication of efforts, especially when establishing digital infrastructure in African nations. Public-private cooperation will therefore enable more young Africans to access training programs and digital infrastructure." Empowering the New Workforce   Employers can also take advantage of the rising use of mobile phones among Africa's youth by providing training and development programs via mobile apps. Workers in South Africa echo the sentiments of those in other countries who rate opportunities to learn new skills and technologies as the number one way they can thrive at work, according to Mercer's Global Talent Trends 2019 report. The survey also shows that workers like to learn independently, and they want their employers to provide platforms enabled with access to curated knowledge and expert sources. A combination of both employer- and employee-driven training can give people more control over what and how they learn while tying their development directly to organizational goals. Mercer's research also reports that 99% of companies are taking action to prepare for the future of work, and they're doing so by identifying gaps between current and required skills supply, developing future-focused people strategies and adapting skill requirements to new technologies and business objectives. For multinational organizations interested in expanding in Africa, these steps will prove critical to upskilling, enabling and empowering the youth workforce. By taking the time to understand what Africa's youth employees need and developing integrated people-centric strategies for them, multinationals can be at the forefront of developing the continent's workforce. This will allow them to meet stakeholders' needs today, while also building a bigger, better and smarter workforce for tomorrow. The long-term benefits will result in a completely reinvented Africa — with engaged workers as far as the eye can see. Sources: 1. "Africa's Youth Unemployment Rate to Exceed 30% in 2019: ILO," 7Dnews, 4 Apr. 2019, https://7dnews.com/news/africa-s-youth-unemployment-rate-to-exceed-30-in-2019-ilo. 2. D, Sourav. "Youth unemployment a 'national crisis' in South Africa, says Ramaphosa," Financial World, 18 Jun. 2019, https://www.financial-world.org/news/news/economy/2276/youth-unemployment-a-national-crisis-in-south-africa-says-ramaphosa/. 3. "Youth Employment in Africa." International Labour Organization, https://www.ilo.org/africa/areas-of-work/youth-employment/lang--en/index.htm. 4. Mbewa, David O. "President Kenyatta launches program to tackle Kenya's youth unemployment," CGTN, 20 Jun. 2019, https://africa.cgtn.com/2019/06/20/president-kenyatta-launches-program-to-tackle-kenyas-youth-unemployment/. 5. "Exclusive: An interview with Hilton's Jan van der Putten on expansion in Africa," Africa Outlook Magazine,7 Apr. 2019, https://www.africaoutlookmag.com/news/exclusive-an-interview-with-hiltons-jan-van-der-putten-on-expansion-in-africa. 6. "World Development Report 2019: The Changing Nature of Work," The World Bank Group, 2019, https://www.worldbank.org/en/publication/wdr2019. 7. Moyo, Simbarashe. "4 ways Africa can prepare its youth for the digital economy," World Economic Forum, 29 May 2019, https://www.weforum.org/agenda/2019/05/4-ways-africa-can-prepare-its-young-people-for-the-digital-economy/.

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